Close this search box.

Utilization Management: Preempting Prior Authorization Problems

Hack #14: Tackling Prior Authorization Issues

This installment of practice management hacks takes on the crucial topic of prior authorization. Although it’s been a task for healthcare providers for more than 20 years, it’s still one of the most vexing areas of reimbursement failure.

This installment of management hacks deals with utilization management, prior review, and takes on the crucial topic of prior authorization. Although it’s been a task for healthcare providers for more than 20 years, it’s still one of the most vexing areas of reimbursement failure.

  1. Often a series of visits for therapy or treatment are authorized by insurance
  2. Identify all visit types that require authorization
  3. Create a countdown or tickler within your software to make sure you maximize visits
  4. Create a countdown or tickler to make sure you don’t exceed the number of visits for which the insurance company has predetermined coverage.

What is prior authorization or prior approval?

Prior approval is a cost saving tool designed by insurance companies to ensure that doctors don’t order unnecessary tests or treatments and prevents patients from abusing certain medications. However, the pain that preauthorization can cause patients is well-documented, and physicians also suffer under the current process.

Prior approval frustrates office staff and costs practices time they don’t have and money that could be better spent. In fact, a 2009 study of primary care practices found that the mean annual labor cost to obtain insurance authorizations was $47,707 per full-time physician. In a 2012 study authors concluded that “prior authorization is a measurable burden on physician and staff time.” Things have not improved since then.
Even when the practice has submitted a request in a timely way, the patient’s insurance plan may not pay for a prescribed medication or test. Insurance companies can deny a request for prior notification for many reasons, including:

  • The doctor or pharmacist didn’t complete the steps necessary.
  • The physician’s office neglected to contact the insurance company.
  • The pharmacy didn’t bill the insurance company properly (incorrect coding).
  • The approval expired after a limited time.

Until all sides realize that the prior notification process is at best an inefficient way to curb fraud and abuse—and at worst, a potentially dangerous way of doing so—there are some things physicians can do to reduce the time and administrative burden it imposes. Here are a few ways to improve the manual process.

  • Weigh payers’ authorization requirements, their level of reimbursement, and the timeliness of payments. If a plan’s reimbursement level is underwhelming, it might be time to drop the payer.
  • Computerize as much of the administrative work as possible by setting up automatic alerts or links to necessary forms in your practice management software.
  • Keep links to necessary manual forms for most commonly requested authorizations close at hand.
  • Get electronic prior authorization software (ePA) to automate most of the authorization process.
  • If your practice has multiple offices, consider centralizing or consolidating prior approval responsibilities in one location. If possible, dedicate staff to processing and managing authorization requests.
  • Know your insurers’ formularies and the medications they cover for common conditions (or know where to find this information).

Pre-authorizations will never be a physician’s favorite pastime but assembling as much information as possible before it’s needed can expedite the process and help reduce denials related to authorizations. This not only ensures timely patient care, it keeps medical practices in charge of the care they provide.  But the best way to beat the burden of obtaining prior approvals is to automate with software and transmit approval requests digitally.

How much does your practice spend obtaining prior authorization? Try our cost calculator to find out.

Leave a Comment